Source: https://www.quantsurv.com/resources/glossary/defined-cost Content format: Markdown version of the public page. Content reviewed: 2026-09-30 # Defined Cost: definition and example Cost calculated under the relevant NEC cost-component rules, which may involve incurred or forecast resources depending on the assessment. By [Jack Butler-Kettle]() ยท Updated 30 September 2026 Guidance for England and Wales. Check the contract, amendments and facts that apply to your job. ## What it means in practice Read this alongside [the NEC Dictionary of Terms](). Defined Cost is a contractual calculation under NEC, not simply every cost appearing in your accounts. The applicable option and cost-component schedule control what is included and how it is assessed. Depending on the assessment, incurred and forecast costs may both be relevant. Keep the selected schedule, rates and supporting assumptions with the calculation. [Compensation event recovery]() can help explain how the event affects recoverable cost. ## Worked example ### The facts A specialist prepares a quotation for a changed installation sequence. ### What happens 1. It maps labour and equipment to the relevant contractual cost components. 2. It separates the allowed cost calculation from the applicable Fee. ### What this shows The quotation can be traced to the contract rather than presenting the whole accounting ledger as Defined Cost. ## Sources 1. [NEC Dictionary of Terms](). NEC Contracts.